Dick's Sporting Goods' (DKS) proposed acquisition of Foot Locker (FL) will bring advantages overlooked by the market, UBS Securities said in a note to investors late Thursday.

"We think the market has priced in too much downside risk," UBS said.

UBS said the acquisition is an "uncertainty" but the stock does not give enough weight to the possible value creation opportunities.

The advantages of the merger include a streamlined Foot Locker store base, increased market share and optimized infrastructure, UBS said.

UBS maintained its buy rating and $225 price target on Dick's Sporting Goods.

Shares of Dick's Sporting Goods were up over 4% and Foot Locker rose 0.8% in recent Friday trading.

Price: 204.24, Change: +8.31, Percent Change: +4.24